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Good Morning.

We’re seeing the first true downward price action since the bull market rally a few months back. So far, HTF price actions are still quite healthy but spot Bitcoin ETF inflows are incredibly weak. We’ll see whether these new holders are diamond hands pretty soon.

In Today's Email:

• What Matters: $1.5T pension fund eyes BTC 👀

• Case Study: Coinbase & friends vs SEC 💥 

• Governance & Features: Grab’s crypto payment 🏍️ 

You read and share. We listen and improve. Send us feedback at [email protected].

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WHAT MATTERS

Japan’s $1.5 Trillion Pension Fund Eyes BTC

State of play: Japan's Government Pension Investment Fund (GPIF) is exploring investments in illiquid assets such as forests, farmland, gold, and bitcoin, according to a recent Request for Information (RFI).

• Currently holding assets in domestic and foreign bonds and stocks, real estate, infrastructure, and private equity, the GPIF aims to diversify its portfolio.

• The decision to potentially invest in these additional assets (forests, farmland, gold, and bitcoin) will be based on the insights gathered from the initial responses to the RFI.

• The submission deadline for information is April 19, 2024.

• There will be no follow-up briefings on the RFI, and details of its usage will remain confidential.

A CFA Institute survey in April 2022 found that over 94% of state government and pension plan sponsors have invested in crypto, Japan's GPIF isn't the first to eye crypto:

• South Korea's National Pension Service invested around $20M in Coinbase shares.

• The Houston Firefighters’ Relief and Retirement Fund has also bought bitcoin and ether.

• Additionally, the Arizona state senate is collaborating with legislators and state retirement fund managers to allocate parts of portfolios to bitcoin ETFs.

Why it matters: We’ve only seen the first-order effect of the spot Bitcoin ETFs being approved in the US.

• While Inflows have been great, we’ve yet to see the long-term effect of what it means for institutional capital to allocate and hold BTC in their portfolio.

For builders and investors: We’re still in the first inning, so don’t get shaken out by short-term price action.

CASE STUDY

Allies Join Coinbase to Urge SEC for Crypto Regulations

State of play: Paradigm, the Crypto Council for Innovation (CCI) and others have filed amicus briefs with the circuit court to join Coinbase’s legal battle against the SEC over its refusal to write specific crypto regulations.

• Coinbase formally requested the SEC to establish crypto industry rules in 2022, but the agency declined in December.

• Last week, Coinbase initiated legal proceedings to compel the regulator to reconsider this decision.

• Paradigm's lawyer argued in the filing that the SEC is improperly applying traditional financial system regulations to crypto.

• CCI stated in its filing that the SEC's lack of industry input on governance is driving businesses to explore more favourable and clearer regulations abroad.

• Coinbase's Chief Legal Officer expressed gratitude on X for the supportive briefs received, including those from the US Chamber of Commerce and Texas Blockchain Council.

You can find all the links to the briefs inside this Paul Grewal’s tweet.

Paradigm emphasizes the necessity of regulatory predictability, a goal behind Coinbase's request for SEC rulemaking—an uncommon instance of a company seeking regulation.

• The SEC's rejection continues its trend of unpredictable enforcement, which often penalizes rather than aids compliance.

However, Prometheum's advancement under SEC rules contradicts Paradigm’s argument in the briefs that all attempts at SEC compliance by crypto firms fail.

• Prometheum's potential success in launching custody and trading services may challenge this assertion, suggesting possible success in SEC navigation.

Take a peek at our referral reward at the bottom of this issue. Share this newsletter and receive our list of 500 crypto VC individuals 👇

INSIGHTS

Crypto VC: Front Running The Narrative

Regan Bozman explained in a Twitter thread the nuance of being a crypto VC in being a contrarian compared to traditional VC.

Exit Strategy

• In traditional VC, exit strategies revolve around (1) depending on late-stage VCs for valuation increases, (2) potential acquirers for exits, and (3) public market investors for IPOs.

• In crypto seed investing, the emphasis is on (1) late-stage VCs to boost valuations and (2) open market buyers for token exit liquidity.

The difference is that late-stage crypto investors are much less than traditional VCs. There have only been 11 funds that led or co-led a $10M+ round in the last 12 months.

• With the crypto growth stage capital market being relatively small, public market participants become crucial.

• Excluding BTC and ETH, over 80% of crypto tokens are likely held by retail investors, highlighting the dominance of individual investors in the broader crypto market.

• Crypto markets prioritize attention over cash flows, valuing current narratives, social media buzz, retail interest, community engagement, and partnerships.

• This focus is evident in sectors like DePIN and $HNT, where being a category leader and narrative integration is more critical than traditional financial metrics.

• Current trends may not last, but today's crypto market dynamics show a clear disconnect between market valuation and cash flows.

Key takeaway → is to not be contrarian, but to front-run the narrative.

This is why crypto VCs often ape into the same category all at once. Because if you can’t front-run, jumping on the momentum is the next best strategy.

FEATURES & GOVERNANCE UPDATE

Grab’s Singapore Accepts Crypto

Grab now allows users to pay with crypto through its partner Triple-A. The super app known for ride-hailing, food delivery, and digital payments across South Asia, currently introducing this feature just in Singapore.

• Users can now pay with five crypto assets on Grab: BTC, ETH, StraitsX’s XSGD, USDC, and USDT.

• Those crypto can be used for daily transactions, including deliveries, rides, or coffee purchases.

• In September 2023, Grab and Circle revealed a pilot for a Web3 wallet in the Grab super app.

Other notable feature updates:

• Zunami launches V2.

• Suilend goes live on Sui.

• Blitz goes live on Blast L2.

• Renzo goes live on Linea L2.

• Nostra launches Staked STRK.

• FRAX goes live on Near Protocol.

• CyberConnect launched Cyber L2.

• EthetFi’s weETH goes live on Mode L2.

• Curve launches the front end for Curve Lend

• Sturdy launches Sturdy Subnet on Bittensor's testnet.

QUICK BITES

• OP Mainnet tests fault proofs.

• Genesis agrees to a $21M penalty.

• Aevo tries a new round of airdrops.

• OKX to pull USDT trading pairs in Europe.

• Sygnum issues $50M of Matter Labs’ reserves.

• GBTC sees a record $642.5 million daily outflow.

• Spot ETH ETFs may bring $45B inflows if approved.

• MicroStrategy acquired another 9,245 BTC for $623M.

• Immutable and Polygon team up for a $100M gaming fund.

• BlackRock to launch a tokenized investment fund with Securitize.

• Nigeria’s SEC proposes a 4x increase to crypto firm registration fees.

• Netherland alleges Alexey Pertsev aided in laundering $1.2B through Tornado.

NOTEWORTHY READS & MEME

• Nic Carter’s read on John Griffin.

• Zach Rynes’ read on the evolution of ChainLink God.

• Dragonfly’s read on the 2023 crypto compensation report.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.